Just a few days ago, I passed the 1 year mark of freelancing, and I thought it’d be a good opportunity to look back at the year and share some thoughts. So, without any further ado, and in no particular order, here’s what I’ve learned so far.
Find clients and then quit
I knew I wanted to give freelancing a try long before I quit my job, and because of this, I was able to bootstrap my business while still earning a regular salary. I highly recommend this. Instead of quitting your job and then trying to figure everything out, start doing it while you’re employed and you don’t have to worry about where your next paycheck is coming from.
By the time I quit my job, I had incorporated my company, found my first clients, and I had been freelancing on the side for a couple months. The extra income I earned on the side gave me the financial cushion I needed to make the switch, and on the day I quit, I knew I was going to have money coming in, from the clients I had already lined up.
Pay yourself a salary
One of the best decisions I made when I started was to pay myself a salary each month. I decided on a set amount, and wrote myself a check every month on the 1st, just like I was at a real job. Even if the company makes 2x my “salary” in a month, I still pay myself the exact same amount.
Since I was happy with what I was being paid at my previous job, any extra money the business earns just builds up as a savings buffer in its bank account, giving me peace of mind. It also is a great way to enforce the difference between business and personal money.
Freelancing is a business, treat it like one
Along the same lines as my salary point, it’s really important to realize that freelancing is a business, and you should treat it as one, even if it’s just you. This means having a separate business bank account, hiring an accountant and a lawyer, and keeping track of profit, expenses, and more.
It’s also important to have time to work on your business, rather than in it. You might be making loads of money, because you’re billing every hour to clients, but you’re leaving no time to plan out your business, which is really important. Once your current client work ends, you won’t have anything in your sales pipeline, since you haven’t had any time to focus on it.
This, in particular, is something I am trying to improve on—too often I’m heads down, working on client projects, when I should be reserving some time every week to work on the business.
One of the most enjoyable parts of freelancing has been everything I’ve had to learn on the business side of things. While I’ve been developing software for a while now, I had basically zero experience running a business until last year. In particular, the following books were, and continue to be, incredibly helpful:
- Working for Yourself: Law & Taxes for Independent Contractors, Freelancers & Consultants: This is an awesome reference on the legal side of freelancing. In particular, the section on contracts was super helpful.
- Double Your Freelancing Rate: Pretty much anything Brennan Dunn puts out is gold. Even if you’re just starting and don’t yet have a freelancing rate to double, this is a great read on selling yourself as a high value freelancer. If you don’t want to buy DYFR yet, don’t miss all the free content on his site.
- The Positioning Manual for Technical Firms: Lots of great advice on how to position yourself as an expert
- The Brain Audit: I’m still working on putting what I learned from this book into practice, but it was a great read on why people buy, and how to attract exactly the type of clients you want.
- The E-Myth Revisted: A classic book on building a business that can scale, using systems. The main takeaway from this book is what I mentioned above: work on your business, not in it.
I also went to a few conferences this year, and the one that I’m still thinking about is PeersConf. I learned so much just by talking to other freelancers and agency owners, and all of the talks were phenomenal. I can’t wait to go again next year.
It’s not as complicated as you think
There’s certainly been a lot to learn since starting out on my own, and when I started, I was worried I wouldn’t be able to figure it all out. From sales to legal issues, it all seemed super overwhelming. Looking back now, it really wasn’t so bad. Sure, it hasn’t necessarily been easy, but it’s certainly not impossible. Once you get started, you’re always learning and always getting better.
For instance, having to do sales probably scares a lot of people away from going out on their own, but at the end of the day, it’s not like you have to be Steve Jobs to land a client or two. You just have to be willing to talk to a lot of potential clients and try to learn something from every interaction you have. As long as you keep learning and improving, you’ll get there, and that’s coming from someone who still has a lot of learning still to do!
Benefits are just money
A common concern potential freelancers share is losing all the benefits of a full-time job: health insurance, 401k matching, paid vacation, and more. At the end of the day, these are really just money. Sure, once you’re out on your own, you’re going to be paying for health insurance yourself, and there won’t be a company matching your 401k contributions, but if you’re not making enough to cover these benefits, you’re not charging enough.
In some ways, figuring out your own benefits can lead to saving money as well—if you want to, you can elect to pick health insurance with a high deductible, to save on monthly premiums. And, for retirement savings, you actually have the ability to save way more money with something like an Individual 401k or a SEP IRA than the typical company plan.
Goals for next year
My #1 goal for next year is to really nail down a sales strategy/pipeline. I’ve had the luxury of finding some longer term clients, which has made me lazy on the sales side of things, but that won’t last forever. Building a consulting company that I can run for the next 20 years won’t happen unless I figure this out.
After that, I’m hoping to start experimenting with working with subcontractors, to be able to take on larger projects and not have everything depend solely on me. Down the line, I can definitely see myself hiring employees, so testing the waters by subcontracting some work out feels like a good place to start.